A Low Rate of Expected Inflation Tends to Lead to a ________

question 42

Multiple Choice

A low rate of expected inflation tends to lead to a ________ rate of actual inflation and a high rate of expected inflation tends to lead to a ________ rate of actual inflation.

• A)high; high
• B)high; low
• C)low; low
• D)low; high

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Definitions:

Revaluation Surplus

An increase in the value of an asset held by a company, recognized in equity, that occurs when the asset's current market value exceeds its previously recorded cost.

Share Capital

The total amount of money raised by a company through the sale of shares to investors.

Share Premium

The amount received by a company over and above the par value of its shares when it issues them to shareholders.

Revaluation Surplus

The increase in value of an asset, recognized in the equity section of a company's balance sheet, when its fair market value is higher than its net book value.